New AI-focused strategy has to address key obstacles: power shortage, 52-hour workweek

South Korea has mastered the art of building what the world designs. The question now is whether it can design what the world will need next.

The artificial intelligence strategy Seoul unveiled on Wednesday reflects a country trying to pivot from manufacturing excellence to technological leadership. Korea’s traditional strengths remain formidable: world-class fabrication, globally competitive memory production and the industrial discipline that turned midtier conglomerates into global powerhouses.

But these advantages alone are no longer sufficient in a world where value creation is shifting from hardware performance to algorithmic capability and system-level integration.

The new strategy revolves around a bid for “AI semiconductor supremacy,” supported by 700 trillion won ($476 billion) in projected private investment through 2047. Much of this capital is tied to physical expansion. Companies plan to build 10 new fabs and raise domestic production capacity to 7.9 million wafers per month.

The government plans to spend 1.27 trillion won for AI chip R&D, back next-generation memory optimized for AI workloads and allocate 620 billion won for packaging and compound semiconductors, two segments where Korea still trails global leaders.

Seoul also aims to widen the supporting ecosystem. Materials, parts and equipment suppliers are expected to benefit from programs designed to reduce dependence on foreign inputs. A proposed Southern Innovation Belt connecting Busan, Gwangju and Gumi, North Gyeongsang Province, is meant to distribute talent and production beyond the Seoul metropolitan area and relieve geographic concentration in chipmaking.

Even the long-standing division between financial and industrial capital may be relaxed to channel funding toward riskier sectors that large banks have traditionally avoided.

Yet these commitments sit beside two conspicuous gaps. The first is power. The envisioned Yongin chip cluster in Gyeonggi Province is projected to require 15 gigawatts of power at full operation, which would be equivalent to more than 10 additional nuclear reactors.

The strategy pledges to secure power and water infrastructure, but leaves unanswered questions about generation mix, transmission routes, environmental approval timelines and who ultimately pays for the upgrades. Without a credible electricity road map grounded in engineering realities, Korea risks building fabs that cannot operate at sustained capacity.

Labor policy is the second constraint. Despite repeated warnings from industry, the National Assembly preserved the 52-hour workweek in the latest semiconductor bill. Advanced chip design, verification and debugging often require concentrated bursts of extended work that do not fit neatly into uniform weekly caps.

The point is not to replicate China’s demanding work culture, but to recognize the operational realities of frontier R&D, where unexpected failures or design flaws can trigger weeks of nonstop iteration that rigid schedules fail to accommodate.

Competition adds further pressure. China’s state-backed semiconductor campaign continues to expand, supported by large investment funds, increasingly capable domestic foundries and tight coordination among ministries. Recent surveys suggest that China is rapidly closing the gap with Korea in overall semiconductor competitiveness, raising concerns about the country’s long-term industrial position.

Meanwhile, the US has adjusted export controls to allow selected advanced AI chips to reach China, complicating market decisions for Korean companies that depend on both economies for growth and must navigate a narrowing strategic corridor.

South Korea has the financial scale, industrial depth and engineering talent to reconfigure the next chapter of the global semiconductor industry. Yet the distance between aspiration and execution remains wide.

The new strategy shows a country that understands what is at stake. Its success will hinge on whether policymakers address the constraints they have long set aside and match bold announcements with the practical decisions that technological leadership requires.

Until then, the gap between Korea’s manufacturing legacy and its AI ambitions will continue to define the country’s semiconductor debate rather than its semiconductor future.


khnews@heraldcorp.com